The times, they are a changin'

The times are a changin' for Bob Dylan - and businesses' insurance needs

"THE times, they are a changin'” will probably be the line Bob Dylan's legacy will be condensed into for future generations. It was a thought that struck a chord back in 1964, just on the cusp of the revolution which would change social norms for the next 50 years.

Today, however, in our interconnected, technology-fuelled world, the pace of change continues to accelerate. This globalised knowledge revolution has created winners and losers, even helping contribute to seismic political changes such as Brexit and president elect Trump.

In business, competition ensures that the pace of change is always at full throttle – evolve or die are the only two options in the long term.

One of those drivers of change in modern business is that we are a more litigious and rights based-society.

That has good and bad implications, but for business – whether small or large – and also the voluntary sector, it means that those who run organisations are increasingly liable.

There's nothing like the threat of personal liability to freeze up the creative abilities of senior staff. As you'd imagine, however, the insurance industry has options to keep you covered. Known as director and officer (D&O) insurance, it is possible to cost effectively provide protection.

Like Dylan the policies first became popular in the 1960s following an explosion of mergers and acquisitions, and a subsequent rise in litigation.

Today D&O policies are much more commonplace and cover a myriad of employment-related exposures including claims from employees, regulators, shareholders, creditors and customers.

No matter what size your organisation is, the legal cost to defend a director is substantial, as are the potential personal penalties. Due to liability risks, protecting boardroom talent can be a challenge – hence the growing need for D&O.

Areas covered include claims against a ‘wrongful act' such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.

The implications are wide ranging. Take for example a manufacturer which advised a supplier to increase inventory because they were expecting a large increase in production.

The need for D&O policies has increased dramatically in recent years. In a report published last year by one of the world's largest insurance brokers it was noted that between 2005 and 2007 the firm dealt with an average of 200-300 D&O claim notifications annually.

European business and legal culture has also been playing catch-up with our cousins across the pond and class actions are becoming ever more prevalent – lowering the costs and risks of suing.

More evidence of the rising need for D&O insurance has been provided by another insurer which tracks the largest D&O claims incurred by listed companies. The 50th largest D&O claim in 2014 was more than double that of the 50th claim made in 2006.

There are steps organisations can take to reduce their exposure such as having clear internal policies about what ethical standards are expected from employees and what your legal procedures are.

It's also a good idea to regularly review potential liabilities, including how much decision-making power individual employees have.

D&O are among the more complex insurance products available, but don't use that as an excuse to disregard them. Professional advice will quickly establish whether or not such a policy could usefully support your risk management strategy.

Who would have guessed 50 years ago that Robert Allen Zimmerman the boy from Duluth, Minnesota, would one day (albeit reluctantly) be the Nobel laureate.

The truth is, the times they are always a changing. Businesses, more than most, need to keep that in mind.

:: Michael Blaney is managing director of Autoline Insurance Group (

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